How to Predict the Profitability of Keywords

Some clients always want to know how profitable keywords are before they launched a campaign to target them. More than that they want to have a good idea of how much revenue could be generated if the campaign is successful. These are all valid concerns and rightly SEO consultants should consider these carefully before proposing keyword expansion to clients. Rather than giving the client vague answers to such questions use the following four steps to predict the profitability of new keywords.

A small PPC campaign will easily and effectively reveal the profitability of keywords. That said it is not always the ideal solution for some clients. In that case the four step forecasting model described below should do the trick. Once you’ve identified your keywords and phrases that you want to target follow the four step process below.

Evaluate Keyword Search Volume

Add your list of keywords to the Google Keyword Tool (it takes up to 100 keywords a query) so you can see the search volume. Check the box that that says only show ideas that are closely related to your keywords. The match type should set be “exact match” or you can also use “phrase match.” Perform the query and download the results.

Calculate Keyword Click-Through-Rate

Your next step will be to do a rough calculation of the click through rates based on your position in the SERPs. The goal is to get to the top but you should do calculations based on various positions on the first page. If your site is not a new site you can log into your Webmaster tools and download the stats and carefully average the CTR based on your other keywords.

What Is Your Site’s Rate of Conversion?

You need to be thorough with this step and calculate your site’s conversion rate as close to reality as possible. If you’re working with the new site this may not be possible. In that case you will have to rely on other published stats based on thorough research. Conversion rates typically fall between 4-8 for above average sites but average sites convert at a rate of 1-4 percent so you can calculate at both ends of scale. This would give you best and worst case scenarios.

Build Your Revenue Forecast

In this last step you will need to know the value of each completed transaction. It could be the sale of a product or service, the price of a lead or even the lifetime value that you expect to get from each completed action.

Multiply that by the numbers you came up with in the calculation of your conversion rates and you will have a fair idea of your expected profitability. Do this for each rank position on the first page and you’ll have a series of results to provide to your client or marketing department.

This might seem to a lot of work at first but it is work that will pay off. Once you have an idea of a keyword’s profitability you will be better equipped to make an informed decision. It even makes the cost of targeting those keywords seem insignificant in light of the expected returns.